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The past two years have shown that the General Assembly is serious about regulatory reform, an attitude that is very welcome — not to mention vital to improving the state’s business climate (as well as the climate for liberty in North Carolina).

Regulations are rules made by state agencies and commissions, under authority delegated them by the legislature, for implementing or interpreting enacted legislation. Ideally, the legislature delegates part of its authority to the agency, which will be staffed by people expert in the particular subject area who will devise good rules to interpret the legislation faithfully. Regardless, their rules carry the full force of law, so those who fall under the regulations face fines and even jail time for violating them.

An ongoing concern from good-government advocates is that this great power is vested in bureaucrats who lack direct accountability to the voters. That is all well and good when they are merely formulating rules to comply with legislative or federal edicts. But what about when a proposed rule rises to the level of something that will have a major impact on citizens and business? Then we face the unhappy prospect of state law being crafted without the consent of the governed.

A solution to this problem has been around for years, and it was first articulated by a federal appellate judge who would later be nominated for the Supreme Court by Pres. Bill Clinton. Speaking before a Georgetown Law School audience in 1983, Judge Stephen Breyer offered a qualified analysis "suggesting that Congress condition the exercise of a delegated legislative power on the enactment of a confirmatory statute, passed by both houses and signed by the President. It would be perfectly in keeping with the Constitution’s language, Mr. Breyer noted, while simulating the function of the traditional legislative veto."

A bill that passed the U.S. House in 2011 sought to enact such a confirmatory statute. H.R. 10, the Regulations from the Executive In Need of Scrutiny Act of 2011 (REINS), would require Congress to approve any proposed rule that would have a major impact on the economy, cause significant cost or price increases on consumers, or have significant harms against competition, employment, productivity, and other healthy economic activities. A joint resolution approving the regulation would have to pass both chambers and be signed by the president for the rule to take effect. Also, if no vote on the regulation took place within 70 session days, the regulation would not take effect.

In other words, if an agency proposed a rule that would significantly affect citizens or industry, that rule would require direct approval from Congress and at least indirect approval from the president in order to take effect.

A REINS approach in North Carolina would restore accountability to rule-making in a key way. At present, the system is heavily biased in favor of expanding regulations, including major regulations (e.g., the Regulatory Reform Act of 2011 defined a rule as having "substantial economic impact" if it had "an aggregate financial impact on all persons affected" of at least $500,000). In a nutshell, if the proposed rule passes muster with the Rules Review Commission (which cannot judge the merits of a rule, only whether it was drafted properly, is clear, and can be seen as fitting within the agency’s statutory authority), then it takes 10 public objections to delay the rule, during which the General Assembly could (they are not obligated) produce legislation blocking it.

All those hurdles, which include the deliberative process of the legislative branch, make it extraordinarily difficult to block a proposed rule. The JLF study linked above found that, of the 6,510 permanent rules introduced between 2004-05 and 2008-09, only 218 were subject to legislative review, leading to just 28 bills to disapprove them. Just seven of those bills passed. In other words, only about one-tenth of one percent of regulations was ultimately blocked.

No (major) regulation without representation!

REINS for NC would reverse the bias. Any proposed major rule would require approval by the General Assembly — meaning it would have to be compelling enough to survive the deliberative process and be approved or at least allowed by the governor — within a set period of time (e.g., 70-90 legislative days) or it would die. The legislature would not be obligated to draft approval legislation, but if it did, a vote to approve would not, it is important to note, be an enactment of the rule into state law, but rather a grant of legislative authority to the agency to proceed with the proposed major rule under the regulatory process.

By requiring major rules to be approved by elected representatives directly accountable to the voters, REINS for NC would also offer two other, preemptive improvements. It would incentivize legislators to write clearer, more narrowly focused bills, given that any excessive interpretation by agencies would return to them for votes anyway. It would also incentivize the agencies to write better rules clearly within their statutory authority.

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